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Marginal Propensity to Consume & Multiplier Effect

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

The portion of extra income that is consumed on goods and services is known as what?

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1. What is the formula for MPC?

2. What is the formula for the multiplier effect?

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About This Quiz & Worksheet

Income can change, and those changes influence our spending and saving habits. This quiz and worksheet will test your knowledge of MPC and the multiplier effect, both related to a change in income.

Quiz & Worksheet Goals

These assessments cover the following:

  • What term refers to extra income spent on goods and services
  • The formula for MPC
  • A formula for determining the multiplier effect
  • Another term for an increase in overall income due to new spending
  • Determining the marginal propensity to consume using given values

Skills Practiced

This quiz and worksheet use the following skills:

  • Information recall - access the knowledge you've gained regarding the effects increased income has on a person and an economy
  • Knowledge application - use your knowledge to check your understanding of the formulas associated with MPC and the multiplier effect
  • Reading comprehension - ensure that you draw the most important information on how to calculate MPC from the related lesson on the propensity to consume and the multiplier effect

Additional Learning

Expand your understanding of changes associated with income by reviewing the lesson called Marginal Propensity to Consume & Multiplier Effect. This lesson discusses the following:

  • What choices a person might make using extra income
  • Where money goes once spent
  • An example of how these formulas can be used in practice
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